Sprint Nextel (NYSE:S) reported an increase of 1.1 million total wireless customers for the second straight quarter, but continued to struggle with postpaid subscriber losses in the second quarter. However, Sprint CEO Dan Hesse said the quarter was a "tale of two halves" and noted that Sprint had its best month of the year for postpaid subscriber additions in June.
Sprint posted a net loss of $847 million, 11 percent wider than the $760 million net loss it had in the year-ago period. Despite the company's continued postpaid subscriber weakness, and the fact that gains for the Sprint brand were outweighed by Nextel subscriber defections, Hesse lauded Sprint's momentum on the company's earnings conference call. He said the company continued to see improvement in customer satisfaction and that more customers switched to the Sprint brand than left it.
Sprint said it continues to expect net postpaid subscriber additions for the full year 2011, and that it will improve total net wireless subscriber additions in 2011, as compared with 2010.
Here is a breakdown of Sprint's key quarterly metrics:
Network Vision: Sprint CFO Joe Euteneuer said the company continued to make progress on its Network Vision network modernization plan during the quarter. He said Sprint successfully completed 1X voice calls and 1X data sessions in both its 800 and 1900 MHz spectrum. He also said zoning and permitting work is under way on 20,000 sites, and Sprint expects to start deploying new multi-mode base stations in the eight largest metropolitan markets by the end of the year. The company also renegotiated master lease agreements with tower companies, including 10,000 sites with Crown Castle, to establish new uniform rates for Network Vision sites.
Clearwire/4G: Hesse said Sprint counted 1.7 million mobile WiMAX device activations in the quarter for Clearwire's (NASDAQ:CLWR) mobile WiMAX network. Sprint announced an LTE network hosting deal with LightSquared, but said the deal does not affect its wholesale arrangement with Clearwire. (See this related story: Sprint confirms $9B LTE network-hosting deal with LightSquared) He said Sprint will continue to purchase network capacity from Clearwire through the end of 2012 and could continue the agreement indefinitely. Sprint executives will provide more clarity on the company's 4G strategy at an investor meeting in New York City on Oct 7.
Subscribers: For the quarter, Sprint added nearly 1.1 million net wireless customers, including net additions of 573,000 retail subscribers and net additions of 519,000 wholesale and affiliate subscribers as a result of growth in prepaid MVNOs and M2M solutions. However, Sprint lost approximately 101,000 net postpaid subscribers during the quarter. Despite the losses, Sprint's postpaid numbers were a net improvement of 127,000, or 56 percent, compared with the second quarter of 2010. The company added 674,000 net prepaid subscribers during the quarter, which includes net additions of 1.1 million prepaid CDMA customers, offset by losses of 475,000 net prepaid iDEN customers. The company served over 52 million customers at the end of the second quarter of 2011.
Churn: Sprint reported its best ever postpaid churn of 1.75 percent, compared with 1.85 percent for the year-ago period and 1.81 percent for the first quarter. The carrier said around 9 percent of its postpaid customers upgraded their handsets during the second quarter. Prepaid churn for the second quarter of 2011 was 4.14 percent, compared with 5.61 percent for the year-ago period and 4.36 percent for the first quarter of 2011.
ARPU: Wireless postpaid average revenue per user increased year-over-year from $55 to $57, the largest year-over-year postpaid ARPU growth in over seven years. Sprint said that increase was due to higher monthly recurring revenues as a result of the $10 premium data add-on charges for smartphones Sprint added in January. Prepaid ARPU of $28 for the quarter declined slightly year-over-year and sequentially as a result of a greater mix of Assurance Wireless, customers who on average have lower ARPU than the rest of Sprint's prepaid subscriber base.
Financials: Sprint's total revenue clocked in at $8.3 billion, up 4 percent form $8.02 billion in the year-ago period. The carrier said wireless retail service revenues came in at $6.7 billion, an increase of almost 5 percent compared with the year-ago quarter and almost 1 percent compared with the first quarter. Sprint said the year-over-year improvement was primarily due to an increased number of net prepaid subscribers as a result of the Boost Monthly Unlimited offering, additional market launches of Assurance Wireless and the re-launch of the Virgin Mobile brand, as well as higher postpaid ARPU.
For more:
- se this Sprint/LightSquared article
- see this release
Special Report: Wireless in the second quarter of 2011
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